Around 4,500 investors to the Aviva Life and Pensions Fund in Ireland will be affected.

It was one of three British commercial property funds worth about £10bn (€11.7bn) that were forced to suspend trading within 24 hours, in the first sign of markets seizing up since Britain's vote to exit the European Union sent asset prices into a tailspin.

A spokesperson for Aviva Life and Pensions Ireland said: "Aviva Investors has today temporarily suspended dealing in its UK Property Trust. This means it cannot accept instructions to buy, sell, transfer or switch units in the Trust until further notice.

"As a result of this decision, Aviva Life and Pensions Ireland has deferred for a period of six months and with immediate effect, encashments and switches out of its UK Property Funds, which currently invest in the UK Property Trust," she said.

"Aviva Life and Pensions will write to all affected customers advising them of this change in the status of the funds. We have informed the Central Bank of Ireland of our actions," the spokeswoman said.

Policymakers in Britain rushed yesterday to emphasise that the seize-up was confined to the sector of "open-ended" funds in property that normally allow investors to exit at will, and did not signal a liquidity problem in wider financial markets.

However, other shares and funds in the commercial property sector also faced a sharp sell-off yesterday as the implications set in that assets could be due for a fall.

Commercial real estate has wider implications for the financial system because it is often used as collateral by companies that borrow from banks.

The three suspended funds collectively account for nearly a third of the £35bn in open-ended British commercial property funds, which the Bank of England had flagged as a major risk ahead of the June 23 vote.

The £4.4bn Property Portfolio run by M&G Investments, the fund arm of insurer Prudential, was the latest to go yesterday afternoon after coming under pressure from investors seeking to take their money out.

Insurer Aviva's fund arm had earlier stopped trading in its £1.8bn UK Property Trust, following in the steps of rival Standard Life Investments, which suspended a £2.9bn fund late on Monday.

Bank of England governor Mark Carney said yesterday that British financial markets were less vulnerable to a shock than they were at the time of the financial crisis in 2008.

However, confidence in commercial property has been hit.

Other large holders of commercial property which could be hit if the market jitters turn into a longer-lasting sell-off are the banks, which are due to report their half-yearly results in the coming weeks.

Open-ended funds tend to hold a pile of cash or similar assets to manage redemptions.

In a worst case scenario they could turn into forced sellers of buildings in a falling market as more investors seek to redeem. Suspending trading is designed to prevent that. (Additional reporting Reuters)